ARTIS REAL ESTATE INVESTMENT TRUST

Transcription

1 ARTIS REAL ESTATE INVESTMENT TRUST Annual Meeting of Unitholders June 14, 2018 Del Crewson Conference Centre 360 Main Street Winnipeg, Manitoba

2 Senior Management Team David Johnson EVP, Asset Management (Central Region) Philip Martens EVP, (U.S. Region) Frank Sherlock EVP, Property Management Dennis Wong EVP, Asset Management Armin Martens President and Chief Executive Officer Patrick Devine SVP, Leasing (U.S. Region) Marie Dunn SVP, Asset Management (U.S. Region) Brad Goerzen SVP, Leasing (Central Region) Amy Melchior SVP, Asset Management (Minnesota) Jim Green Chief Financial Officer Greg Moore SVP, Asset Management (Western Region) Kim Riley SVP, Investments & Development Ron Wieler SVP, Development (U.S. Region) Leon Wilkosz SVP, Asset Management (Wisconsin) 02

3 Agenda 1. Call to Order 2. Appointment of Scrutineers 3. Registration of Proxies 4. Notice of Meeting 5. Scrutineer s Report 6. Receipt of Annual Consolidated Financial Statements 7. Fix Number of Trustees 8. Election of Trustees 9. Appointment of External Auditors 10. Report of the President and C.E.O. 11. Termination 03

4 Current and Nominated Trustees Armin Martens Edward Warkentin Bruce Jack Steven Joyce Trustee, President & Chief Executive Officer Chairman of the Board Trustee Trustee Cornelius Martens Trustee Ronald Rimer Trustee Victor Thielmann Trustee Wayne Townsend Trustee 04

5 Nominees Ida Albo Nominee Lauren Zucker Nominee 05

6 Report of the President & C.E.O. Armin Martens President & Chief Executive Officer 06

7 Core Mission and Objectives CORE MISSION To create economic value for our Unitholders through active investment and management of commercial real estate in Canada and select U.S. markets KEY OBJECTIVES To maintain a course of continuous improvement: Improve the calibre of our real estate portfolio Improve our Earnings Improve our Balance Sheet Improve the reliability/sustainability of our cash distributions, enabling them to grow over time 07

8 Strategy and Business Model 01 Geographic Diversification Canada and the United States 02 Product Diversification Office Retail Industrial 03 Internal Growth Results driven active asset management Increasing same property net operating income Accretive recycling of capital $200 million development pipeline at positive spreads to market 08

9 Portfolio Overview Diversified Commercial Properties 0.8M sq.ft 4.1M sq.ft 1.5M sq.ft 3.9M sq.ft 4.0M sq.ft 1.2M sq.ft 5.7M sq.ft 1.7M sq.ft Office Industrial Retail 1.7M sq.ft 0.4M sq.ft 2 countries 3 asset classes 10 major markets 236 properties 25 million square feet $5.4B GBV 93% occupancy Information on this slide is inclusive of Artis proportionate share of its joint venture arrangements. Occupancy percentage includes commitments on vacant space and excludes properties held for redevelopment and certain completed new developments. 9

10 Portfolio Diversification NOI by Asset Class NOI by Geographical Region 60% Canada 40% USA Retail 21% Office 53% AZ 9% WI 9% US - Other 6% SK 6% ON 12% MB 14% MN 18% BC 4% Industrial 26% Calgary - Office 9% AB - Other 13% Property NOI for three months ended March 31, 2018, inclusive of Artis proportionate share of joint venture arrangements 10

11 Capital Recycling Objectives 1. Accretion - Buying Low and Selling High, meaning selling at low cap rates and buying at higher cap rates. 2. Improve Artis diversification - both by geography and asset class. 3. Improve overall caliber of Artis portfolio of real estate. During 2017: Artis sold approximately $320 million of properties at a cap rate of 5.6% Artis acquired new properties in our target markets at a 6.4% cap rate Artis developed new industrial and office properties at yields of 7.0% 11

12 Capital Recycling Progress Acquisitions New Generation Real Estate - At Weighted-Average Cap Rate of 6.4% vs. Dispositions at Weighted-Average Cap Rate of 5.6% Roosevelt Commons, Tempe, AZ Rocky Mountain Distribution Center, Aurora, CO Superstition Springs Commerce Center, Mesa, AZ Clearwater Creek Distribution Center, Twin Cities Area, MN 12

13 Development Projects Under Construction Approximately $300 million of major redevelopment and new construction projects under way in 2018 Targeted weighted-average unlevered yield of 7.20% vs. weighted-average exit cap rate of 5.75% Park 8Ninety, Houston, TX Park Lucero Phase IV, Greater Phoenix Area, AZ Cedar Port, Houston, TX 13

14 Upcoming Development Projects Multi-Family 300 Main Street, Winnipeg, MB 395 apartment units Stampede Station II, Calgary, AB 300 apartment units 14

15 Upcoming Development Projects Multi-Family 1-12 Concorde Gate, Toronto, ON 500 apartment units 415 Yonge Street, Toronto, ON 400 apartment units 15

16 Select Financial Information $700 $1.60 $600 $500 $509 $553 $573 $543 $1.55 $1.55 $ millions (1) $400 $300 $200 $100 $0 $317 $342 $349 Property NOI $ $ (1) (1) Revenue $1.50 $1.45 $1.40 $1.42 $1.49 FFO per Unit (2) $1.43 $15 $14 $13 $ Analyst Consensus Information Target Price Net Asset Value FFO Per Unit $14.20 $14.20 $1.36 Volume-Weighted Average Unit Trading Price (1) Inclusive of Artis proportionate share of its joint venture arrangements. Excluding lease termination and non-recurring other income. (2) The 2016 comparative information has been revised to reflect the impact of the new FFO guidelines as issued by REALpac in February and earlier years have not been restated. 16

17 Artis Peer Comparisons at December 31, 2017 Annualized Total Unit Return Comparison 1 Year Annualized Total Unit Return Comparison 3 Year 25% 20% 15% 10% 5% 0% -5% Artis REIT TSX Cap REIT Cominar REIT CREIT H&R REIT Morguard REIT 10% 5% 0% -5% Artis REIT TSX Cap REIT H&R REIT CREIT Cominar REIT Morguard REIT 8% 6% 4% 2% 0% -2% Annualized Total Unit Return Comparison 5 Year Artis REIT CREIT TSX Cap REIT H&R REIT Morguard REIT Cominar REIT 17

18 Looking Ahead Head Winds and Opportunities for REITs and Artis Calgary Office Market Realities Continues to put negative pressure on Artis earnings Will not bottom out until the end of 2019 with a 28% vacancy rate Completion of the Enbridge Line 3 (2019) and the Trans Mountain Pipeline (2020) are vital to Alberta s ability to increase oil production, create jobs and lease office space New REIT Paradigm Interest rates are not falling anymore they are level or rising Cap rates are now level or rising REIT management teams have to be good at all things real estate So, what about AX on the TSX? Investors are being well rewarded Artis intrinsic value continues to improve Stay focused and disciplined to maximize Unitholder value 18

19 Why Invest in Artis? 1 Highest Yielding Investment Grade REIT 8.0% distribution yield Investment-grade rating BBB (low) Strong balance sheet Great value proposition 2 Diversified Platform by Geography & Asset Class Highly diversified platform 2 countries, 3 asset classes 236 properties $5.4 billion GBV $2.1 billion market cap 3 Unlocking Value Through Development ~$570 million projected value creation (~$3.80 per unit) Industrial, Office and Apartment developments 7.4% targeted unlevered yield 4 Additional Growth Levers Accretive recycling of capital ~$300 million recycling target 20 Alberta properties sold at a premium to IFRS value and recycled at 150 bps spread in 2016 & 2017 Accretive refinancing of existing debt Significant upside upon a recovery in Alberta Alberta expected to have highest GDP growth in Canada in 2017 and

20 Questions 20

21 ARTIS REAL ESTATE INVESTMENT TRUST Annual Meeting of Unitholders June 14, 2018 Del Crewson Conference Centre 360 Main Street Winnipeg, Manitoba